Dear Rusty: I had to start collecting Social Security (SS) at age 62, and I am 75 now. I believe that in the last 13 years I have saved the Social Security Administration (SSA) money, so I do not know why I cannot draw my full benefits now.

If I had started drawing at 65 at $1,200 per month, then I would have drawn $14,400 per year. Instead, I received $680 per month from 62 to 75, or $8,160 per year, or about $106,000 over 13 years. Compare that to the age 65 amount of $14,400 per year for 10 years, which is $144,000. So, by claiming at 62, I have saved the government over $38,000 by age 75. It would make seniors lives so much easier if they could draw full Social Security at 75 years old, after getting only part of their SS.

Signed: Second-guessing

Dear Second-guessing: The difference between benefits claimed at various ages causes many to reflect, as you have done, about what might have been had you waited longer to claim. But there is an error in your calculations. If your age 62 monthly benefit is $680, your age 65 monthly benefit would have been about $845, not $1,200. Thus, by age 75 you would have collected about $101,400 by claiming at 65, versus the $106,000 you have received by claiming at age 62. In other words, you still would not have broken even had you claimed at age 65.

The SSA says that it doesn’t matter when you claim — it says that if you claim early your payments will be smaller, but you’ll get more of them. Where SSA’s argument falls apart is when life expectancy is longer. Our experience is that if you wait until your full retirement age (FRA) to claim (which is age 66 in your case), versus claiming at age 62, you will collect the same amount of total money by about age 78. In other words, the “breakeven age” for waiting until FRA to claim is about 78. So, you will reach your personal “breakeven age” in about 2 ½ years (at age 78). And this is precisely why we encourage everyone to understand their life expectancy when deciding when to claim Social Security — those who expect to live longer will, indeed, get more SS money if they delay claiming.  

Your benefit is determined by your age when you claim, and if you claim before your FRA your monthly amount is permanently reduced. If you claimed at age 62 and your monthly amount was $680, then in the four years until you reached age 66 (your FRA) you would have received about $32,640. If you had, instead, waited until your FRA to claim, your benefit at age 66 would have been about $906 per month. Collecting $906 a month (at 66) versus $680 per month (at 62) would make your breakeven age about 78. If you claimed at age 65 instead of 62, your breakeven age would have been about a year earlier (77).

So, have you saved the SSA money? Up to this point, you have not. Since you claimed at age 62, you have collected about $680/month for 13 years until you were 75 (or about $106,000). If you had waited until age 65 to claim you would have, instead, collected about $101,400 —in other words you have received more, so far, by claiming at age 62. But that will change when you reach 77 (your breakeven age, had you claimed at 65). Starting at age 77, you will have received less in cumulative lifetime benefits because you claimed at age 62. Which, again, is why — at the AMAC Foundation’s Social Security Advisory Service — we encourage everyone to consider life expectancy when deciding when to take Social Security benefits. Of course, there are other factors too, not the least of which is financial need, but life expectancy is key. And since the benefit you get when you claim is permanent (except for annual cost-of-living adjustments), deciding when to claim Social Security is a decision that affects a lifetime.        

Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

 Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained, and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.